Red tape nightmare over employment tax change

Published: 08 April, 2013

Accountants warn that many businesses are “completely unprepared” for a wave of bureaucracy coming into force with the new Pay As You Earn (PAYE) system.

They also warned that HM Revenue & Customs (HMRC) may not be able to cope as thousands of its staff are on strike today (8 April) and its computer systems have been undergoing “essential maintenance” for the past few days.

Under the new Real Time Information (RTI) system, more than one mllion businesses must immediately report any wage payments to the tax authorities. Small businesses have a six-month grace period in which they can report once a month, but they will still have to get to grips with complex new rules and computer software before complying fully in October.

The new system is the foundation of the government’s universal benefit welfare reform because it will allow officials to adjust handouts immediately when earnings change.

Some employers are also complaining that the free HMRC software has been crashing during its pilot stages, the Daily Telegraph has reported. Others say that the new requirements are so complicated that they will have to seek professional help or invest in expensive software, rather than use the free HMRC version.